The Global Innovation Index judges nations’ progress against a basket of parameters including infrastructure, research output plus market stability and institutional strength. In 2010 New Zealand surged ahead to 9th place out of 125 countries after languishing at 27 the previous year. But in 2011 we dropped back a little to 15th place, or more correctly, we were slightly overtaken by our close competitors U.S., U.K., Ireland and Canada. Whilst there’s no need for alarm, we must remain vigilant that government keeps the right settings in place and that businesses continue to take advantage of global opportunities by leveraging our creativity and growing new knowledge. I remain optimistic.

Last week I attended the outstanding Ice Ideas conference presented by the much lauded Icehouse business incubator which has a close relationship with the University of Auckland and has been involved in raising $50 million in funding for high-tech companies in the ten years since its inception. The incubator has now set itself the goal of achieving 3000 new business launches over the next decade. It’s an unashamed grab for more deal flow and a call to action for the community to support the initiative financially, for the betterment of NZ Inc.

Incubation is certainly a valuable aspect of the overall innovation ecosystem and I applaud these efforts. But we must also ensure that other structural features are strengthened, not undermined. Not the least of these is ensuring that the spectre of a capital gains tax (CGT) on business asset sales never sees the light of day. On the other hand, some kind of modest taxation of gains on speculative property transactions certainly has merit, in order to encourage more productive forms of investment. Unfortunately the two issues, although related, tend to become intertwined in the minds of the public as politicians desperately seek to gain a foothold.

A capital gains tax on business sales would discourage investment and accelerate the loss of talent offshore by taking away one of the key competitive advantages that we have over other developed economies. It may also have a negative impact on New Zealand’s standing as an innovative and business investment friendly destination.

Speaker presentations from the Ice Ideas conference are available here.

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